COVID Cost Control: Adjust your upfit strategy to roll with the punches

With the entire world feeling so out of alignment these days, you’d think every link in your vehicle supply chain would be taking a beating too, right? Here’s the good news – many truck and equipment upfitters are operating at normal capacity or very close to it for now.Our direct involvement in multiple links of the fleet supply chain via our upfitter, Auto Truck Group, arms us with additional insight into how and when those conditions may change based on factors such as chassis and material availability.

So what can you do right now? Developing a short-term plan for your Q2 upfit orders is your best strategy for fulfilling your company’s immediate vehicle and equipment needs. Then you’ll need a long-term approach for Q3 that addresses your 2020 recovery plans and sets up your company for the 2021 ordering cycle.

Let’s walk through the order-to-delivery steps to understand where the industry stands now, and figure out where you may need to adjust your future approach.

Orders

Can you believe that 80 percent of all North American automakers stepped offline the third week of March? We’re all hoping that production starts back up in May, but the decision to reopen for each OEM depends on public health conditions and how the factories plan to provide proper health protection for their workforce.

Don’t panic, and definitely don’t throw out your 2020 replacement schedule. Use it as your new starting point, adjusting as needed to align with the fleet demand you’re seeing right now. Is it going up or coming down? Whatever it may be, you may need to move orders out, delay some deliveries, and be ready for even more sudden changes.

When the assembly lines get moving again, it’s been said the OEMs plan to build all the orders they got before they shut down, and fleet orders will be at the top of their work piles. You should know, there’s a chance that orders for 2020 models could get bumped up to 2021 models. If you still need your Q2 orders to go through, you may be thankful to take whatever year is available as long as the vehicle overall meets your needs. Think of this as a short-term solution – part of your recovery strategy. Then make plans to talk with industry experts about your 2021 selector, to make sure your orders for next year are spot on for your fleet needs.

Upfitting

So far, most upfitters such as Auto Truck haven’t felt a huge hit by the OEM factories closing. That’s because they are still working with either the custom orders or pool vehicles that were already in-house when the pandemic hit.

But you could run into trouble if a key supplier cannot supply your upfitter with parts for your vehicles and equipment. Your upfitter may have to come up with another option, relying on their engineers to see what else can be done. Unfortunately, if there’s only that one solution for your truck, you might have to wait a little longer. Auto Truck and other upfitters will work with you to reset your delivery time frame and make every honest effort to get it done.

Aside from those one-off parts issues, until the standard inventory of vehicles, equipment and other materials dries up, upfitters can keep building. So for the short-term, there’s still a possibility your new vehicle upfit needs can be met. However, if the factories do not reopen before the upfitters’ inventories run out, that’s when you’ll feel the long-term impact. You may have to go back to the drawing board with your fleet partner’s engineers and analysts to sketch out a long-term plan for your new “not what I originally planned” normal.

In the meantime, you should be extra vigilant with your providers to fully understand what you are getting and when you are getting it. You don’t want any decisions to turn into unexpected surprises and the wrong vehicles and equipment. If your fleet is managed by ARI and your upfitting handled by Auto Truck, we’re already in lockstep to ensure you’re fully aware of any changes on the horizon. Everyone is coping with the disruptions, and it’s great when you can be flexible and patient right now, but you still need to retain as much of your business operations as possible. Your company is relying on you to keep the fleet strong through the recovery stage. If you need those specialized vehicles to get you there, hang in and push for what you need.

Delivery

Third-party transportation companies are stepping it up big time right now. They are grabbing what they can from the OEMS; they’re filling the void for railcars; they are working with upfitters and also filling gaps for dealerships whose operations are iffy. With many new players in the supply chain, everyone’s intentions are good, but the communication chain can experience some hiccups.

Stay in constant contact with your providers. If your partners aren’t directly connected like ARI and Auto Truck, make sure they are working together on your behalf regardless. Track your vehicles through every stage of the delivery process and ask as many questions as you need to if things start looking off track. Yes, delays will happen, but keeping everyone’s expectations in check is the key to staying organized and in control.

The link holding the chain together

So many things are out of our control these days. Looking at the big picture, the state of the auto industry plays a critical role in North American economies. Everyone is anticipating the day that the OEMs will open their doors; for everyone it will signify a big step away from this craziness. Realistically, when that happens, a bottleneck will form, probably as Q2 rolls into Q3.

Upfitters understand this and the challenges that you are facing with unexpected spikes or drops in your need for vehicles. Everyone keeps saying “we’re in this together.” You hear it everywhere, and that includes the upfitting industry who are committed to supporting your personal and professional wellbeing.

Communication is the link that helps hold your supply chain together. Your upfitters can help you manage short-and long-term goals by working seamlessly with your fleet partners on your ordering, upfitting, and vehicle management needs. When your upfitters are in lockstep with your fleet partner, you’ll get faster answers, avoid fumbling, and mitigate delays. This is a great example of the value that comes with integrated partnerships like ARI and Auto Truck that help set your company up for success.

And, there’s an upside. Today’s coping techniques are setting the stage for a better tomorrow via rapid innovation. At Auto Truck, we’re using video calls to speed up pilot reviews and design feedback sessions – this cuts down on costs and takes up less time than everyone traveling everywhere. We’re all going to emerge from the coronavirus as stronger, more agile people and companies.

What does the future look like?

It’s hard to tell how short short-term planning will last and when specifically we’ll transition to the recovery stage. The common phrase these days when looking toward the future is “in stages.”

Your ARI resources as well as Auto Truck Group’s Sales and Account Management teams are here to support you and keep the links in your supply chain strong through continuous communication. Please reach out to us with your questions or concerns and visit ARI’s COVID-19 Resource Center for the latest information from us and our industry partners. You can also sign up for daily updates.